Treasury announces new rules for tax shelters

WASHINGTON -- The Treasury Department announced new rules Thursday designed to help the government crack down on dubious tax shelters.

The rules, which take effect today, lay out circumstances under which taxpayers must disclose their participation in potentially abusive tax-avoidance transactions and when promoters must register such transactions with the government.

The rules refine existing reporting and disclosure requirements in this area, making them easier for government to administer, Treasury said.

"By issuing final regulations, we are putting the promoters that sell questionable transactions and the taxpayers that participate in them on notice," said Pam Olson, Treasury's assistant secretary for tax policy. "We are increasing our efforts to identify and shut down abusive tax avoidance transactions as quickly as possible."

Taxpayers and promoters who don't comply with the new rules could be subject to fines.

Experts say the government loses billions of dollars a year in revenues because of abusive tax shelters. Treasury officials said they don't have statistics on such losses.

"The final regulations improve the system by helping us get the information needed to identify questionable transactions and the taxpayers who have participated in them," Olson said.